1. Which one of the following types of inventory accounts would be used by a wholesaler or retailer? a. Raw materials inventory b. Work in process inventory c. Finished goods inventory d. Merchandise inventory 2. The inventory account a manufacturer uses to record the cost of products completed and available for sale is called a. Raw materials inventory b. Work in process inventory c. Finished goods inventory d. Merchandise inventory 3. Items should be reported as part of the company's "inventory" at year end, if they are a. Purchased from a creditor, available for sale, and paid for the following year. b. Held in anticipation of an increase in market value. c. Determined to be part of cost of goods sold. d. Sold during the period. 4. For what reason might retailers like Target select an accounting period that ends on or near the end of January? a. The company originally started business operations on that date. b. Business activity has reached a slow period that is suited to the preparation of its financial statements at the end of the year. c. The company's CPAS are attempting to spread out the workload. d. The Internal Revenue Service requires merchandise companies to select such a date for their fiscal year. 5. Which one of the following accounts most likely would appear on the income statement of a merchandise company, but not on the income statement of a service company? a. Cost of Goods Sold b. Selling Expenses c. Administrative Expenses d. Income Tax Expense 6. Which one of the following is not a cash equivalent? a. 30-day certificate of deposit b. 60-day commercial paper c. 90-day U.S. treasury bill d. 180-day note issued by a local or state government 7. Effective cash management and control includes all of the following except a. The use of a petty cash fund b. Bank reconciliations c. Short-term investments of excess cash d. Purchase of stocks and bonds 8. Checks presented for payment and paid by the bank are known as a. Canceled checks. b. Certified checks c. NSF checks d. anding checks 9. Deposits made by a company but not yet reflected in a bank statement are called a. Debit memoranda b. Deposits in transit c. Credit memoranda d. None of the above 10. Which one of the following statements is true? a. Good cash management practices dictate that a company should maintain as large a balance as possible in its cash account. b. Sound internal control practice dictates that disbursements should be made by check. c. The person handling the cash should also prepare the bank reconciliation. d. Petty cash can be substituted for a checking account to expedite the payment of all disbursements. 11. Which one of the following is an accurate description of Allowance for Doubtful Accounts? a. Contra account b. Liability account c. Revenue account d. Expense account 12. Which one of the following statements is true? a. When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. b. An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. c. The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. d. A subsidiary ledger takes the place of the control account for some companies. 13. If a company uses the direct write-off method of accounting for bad debts, a. It is applying the matching principle. b. It will record bad debt expense only when an account is determined to be uncollectible. c. It will reduce the accounts receivable account at the end of the accounting period for estimated uncollectible accounts. d. It will report accounts receivable in the balance sheet at their net realizable value. 14. Fenchurch Corp. uses the direct write-off method to account for bad debts. What are the effects on the accounting equation of the entry to record the write-off of a customer's account balance? a. Assets and liabilities decrease. b. Assets and owners' equity decrease. c. Owners' equity decrease and liabilities increase. d. No effect; assets increase and decrease by the same amount. 15. If a company uses the allowance method of accounting for bad debts, which one of the following statements is true? a. It violates the matching principle. b. It will record bad debts only when an account is determined to be uncollectible. c. It will reduce the accounts receivable at the end of the accounting period for estimated uncollectible accounts. d. It will report accounts receivable in the balance sheet at their net realizable value. 16. Wyoming Real Estate purchased a building for $600,000 in 2002. At the end of 2014, when it had a book value of $450,000, it was appraised for $1,000,000. A potential buyer offered $900,000. Wyoming rejected the offer. What amount should is recorded on Wyoming's records at the end of 2014 in the account called Buildings? a. $1,000,000 b. $900,000 c. $600,000 d. $450,000 17. Assets classified as property, plant, and equipment are reported at a. each asset's estimated market value at the balance sheet date. b. each asset's estimated salvage value at the balance sheet date. c. the estimated depreciable cost at the balance sheet date. d. each asset's original cost less depreciation since acquisition. 18. Which statement is true concerning operating assets? a. Operating assets have no physical properties. b. A company's operating assets are important to its short-term liquidity. c. Operating assets are used over two or more periods to generate revenues. d. All operating assets are reported on the balance sheet 19. Which of the following accounts would not be reported in the Property, Plant, and Equipment section of a balance sheet? a. Accumulated Depreciation-Buildings b. Buildings c. Depreciation Expense-Buildings d. Land 20. On the balance sheet, the cumulative amount of plant and equipment already expensed is reported in an account called a. Accumulated Amortization b. Accumulated Depreciation c. Amortization Expense d. Depreciation Expense